Correlation Between China Merchants and Lepu Medical
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By analyzing existing cross correlation between China Merchants Bank and Lepu Medical Tech, you can compare the effects of market volatilities on China Merchants and Lepu Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Merchants with a short position of Lepu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Lepu Medical.
Diversification Opportunities for China Merchants and Lepu Medical
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Lepu is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and Lepu Medical Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepu Medical Tech and China Merchants is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Merchants Bank are associated (or correlated) with Lepu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepu Medical Tech has no effect on the direction of China Merchants i.e., China Merchants and Lepu Medical go up and down completely randomly.
Pair Corralation between China Merchants and Lepu Medical
Assuming the 90 days trading horizon China Merchants Bank is expected to generate 1.1 times more return on investment than Lepu Medical. However, China Merchants is 1.1 times more volatile than Lepu Medical Tech. It trades about 0.25 of its potential returns per unit of risk. Lepu Medical Tech is currently generating about -0.01 per unit of risk. If you would invest 3,647 in China Merchants Bank on September 29, 2024 and sell it today you would earn a total of 287.00 from holding China Merchants Bank or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. Lepu Medical Tech
Performance |
| Timeline |
| China Merchants Bank |
| Lepu Medical Tech |
China Merchants and Lepu Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Lepu Medical
The main advantage of trading using opposite China Merchants and Lepu Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Lepu Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lepu Medical will offset losses from the drop in Lepu Medical's long position.| China Merchants vs. Kweichow Moutai Co | China Merchants vs. Contemporary Amperex Technology | China Merchants vs. G bits Network Technology | China Merchants vs. BYD Co Ltd |
| Lepu Medical vs. Chongqing Changan Automobile | Lepu Medical vs. Malion New Materials | Lepu Medical vs. Cangzhou Mingzhu Plastic | Lepu Medical vs. Dongfeng Automobile Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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